UK wages took bigger hit post-crisis than govt. estimate- report

​UK wages during the financial crisis plummeted even more than originally estimated, new research shows.

Official statistics
suggest that wages fell by 8 percent as a result of the financial
crash. However, a new report published by Resolution
Foundation on Thursday suggests they actually fell by around 10
percent.

The paper, titled “The case for an all workers earnings measure”,
argues that official figures did not account for the wages of
people who are self-employed, which has drastically increased
since 2008.

There are roughly 4.5 million self-employed people in the UK, one
of the groups hardest hit by the recession.

According to the Office of National Statistics, real wages for
self-employed Britons fell by more than 12 percent, a fifth more
than those employed in private sector companies.

Laura Gardiner, a senior analyst at the Resolution Foundation,
says the way that wages are currently measured is inadequate, as
it does not take into account changes in the labor market, such
as more people becoming self-employed, or working on a zero hours
contract.

“Important economic and policy decisions are informed by the
official data on wages, yet, because it does not capture the one
in seven workers who are self-employed, it gives a picture that’s
incomplete at best and sometimes misleading. What we know about
earnings is central to our understanding of the recovery and the
timing of interest rate rises so it’s crucial that we equip
ourselves with the best possible wage measure,” she said.

The paper calls for government statisticians to use an “all
worker” measure, that would take into account all earnings when
developing economic policy.

Gavin Kelly, the Resolution Foundation’s chief executive said:
“If we didn’t count the self-employed in our jobs data, we’d
have no idea what was really going on in our labor market.

"Yet when it comes to earnings all official measures overlook
the plight of the UK’s 4.5m self-employed – that’s equivalent to
almost the entire population of Wales and Northern Ireland. This
partial approach means we have an inaccurate picture of what has
really been happening to earnings in our economy.”

Following the report, officials expressed their concerns that the
number of people who are self- employed are not accounted for,
noting that they are important in setting future interest rates.

The average wage in Britain is currently £27,000 according to the
ONS, although the salary of many new jobs created since the
financial crash is significantly lower, at around £14,000 per
annum.